States will have to use construction cess pool to make workers skilled

This would help the unorgansied workers to join the skilled workforce and help in achieving Prime Minister Narendra Modi’s Skill India Mission that aims to impart skills to 40 crore people by 2022Yogima Sharma | ET Bureau | August 05, 2015, 14:26 IST

Unless new jobs, especially in the manufacturing sector, are created, imparting skills to millions will not solve the problem, says Jayan Jose Thomas.NEW DELHI: States may no longer be able to dole out freebies to construction workers using large funds available under the construction cess pool. Instead, they will have to use over Rs 16,000 crore of this unused money to compulsorily impart skill trainings to millions of these unorganised workers to help them become drivers, electricians, plumbers or even carpenters.

This would help the unorgansied workers to join the skilled workforce and help in achieving Prime MinisterNarendra Modi’s Skill India Mission that aims to impart skills to 40 crore people by 2022. A senior government official told ET that the labour ministry will soon come out with a road map outlining the mandatory usage of this fund for welfare of onsite construction workers with focus on upgrading skills, education of their kids, setting up of creches and ensuring health and hygiene of these workers.

The construction industry in India is the second largest employer, next to agriculture, consisting largely of unorganized workforce. Nearly 89 per cent of the total construction workers are unskilled. “Out of the Rs 20,000-crore construction cess collected so far, barely Rs 4,000 crore has been used by states mainly for giving freebies like television, refrigerator or bicycle to gain political mileage. However, we will soon come out with guidelines that would make it mandatory to impart skill training to these workers,” the official said, requesting anonymity.

According to the official, any construction site employing more than 100 workers, with construction activity lasting for more than three months will have to impart on-site skill training to these workers during their leisure time, significant proportion of the cost of which would be borne out of the construction cess pool while the rest would be contributed by the construction company.

The idea is to help construction workers move up the ladder on skill development and this can easily be done through a contractor who is using the services of these workers on contract for a given project. “This, in turn, will help them to move up in the salary bracket once they have formal training,” the official said. The proposal could face stiff opposition from the construction industry which is reeling under low demand coupled with a huge inventory as introduction of this additional liability would add to their overall cost.

The Building & the other Construction Workers Welfare Cess Act, 1996, provides for levy and collection of cess not exceeding 2 per cent but not less than 1 per cent of the cost of construction incurred by an employer and collected by states. In the absence of depositing the cess with the state, the construction company is liable for cash penalty (equivalent to the amount of cess due on the company), imprisonment of up to six months and a fine of up to Rs 1,000.